The Nordics implement PSD 2

In brief…

The Payment Services Directive II (Directive 2015/2366/
EU of 25 November 2015 on payment services in the
internal market) (PSD 2) must be transposed into local
legislation by 13 January 2018. PSD 2 enables bank
customers, both consumers and businesses, to use thirdparty
providers (Payment Initiation Service Providers
(PISPs) and Account Information Service Providers (AISPs))
to manage their finances. The scope of regulation will also
include the issuing of card-based payment instruments
connected to an account provided by another payment
service provider (Third Party Payment Instrument Issuers).
Once their customers have provided consent, banks are
obliged to provide these third-party providers with access
to such customers’ accounts through machine-to-machine
communication. Banks can, however, also act as PISPs and
AISPs themselves.

As well as creating a framework to allow new competitors
to enter the market, PSD 2 also creates a single set of rules
for payments and payment services across the European
Union. PSD 2 also requires the payment service providers
to exercise robust customer authentication when a
customer initiates an electronic payment transaction and
accesses its payment account online.

PSD 2 is relevant to payment service providers, such as
credit institutions, payment institutions, e-money firms and
their agents, many FinTech firms, social media networks
and telecommunications firms among others.

PSD 2 is a maximum harmonization directive, so the
member states may not introduce provisions other than
those laid down in the directive. However, PSD 2 provides
for a number of options, meaning that each individual
member state can decide whether or not to exercise such
optionality.

PSD 2 will have a major impact on payment and account
services delivered in Europe. Together, the Nordic
countries (Denmark, Finland, Norway and Sweden)
represent a significant and strategic market in Europe.
This article describes the implementation of PSD 2 in the
Nordic countries, highlights the applied member state
options and points out where the local implementation
goes further than the minimum obligations in the directive.

Denmark

On 2 June 2017, the Danish parliament passed legislation
which implements PSD 2. The legislation comes into force
on 1 January 2018. Generally, the Danish legislation does
not differ substantially from PSD 2. However, in certain
areas the Danish implementation law goes further than
the minimum obligations in PSD 2 in relation to having
sufficient consumer protection and keeping existing Danish
payment solutions in tact, especially regarding the national
debit card ‘Dankortet’.

In short, the areas concerned are:

Data-protection

Rules concerning payment institutions and e-payment
institutions management and organization of such
institutions, especially the obligation to have an
arrangement for their employees to be able to report
any possible breach of the law committed by the
institution

Rules on good business practice

The obligation to provide information of any surcharges
prior to the execution of a transaction

Furthermore, some of the optionality provided for in PSD
2 has been used in the Danish implementation law. This is
the case for:

Article 32 – exemption for smaller payment service
providers from part of the procedure and conditions

Article 42 and Article 63 – doubling the amounts
set out in the PSD 2 for the value of individual payment
transactions, spending limit and store funds according
to the framework contract for low-value payment
instruments and electronic money

Finland

In Finland, PSD 2 will be transposed in two par ts.
Titles III and IV are implemented by changes to the Finnish
Payment Services Act and titles II, IV and VI by changes to
the Finnish Payment Institutions Act.

The draft Finnish implementation acts and the draft
explanatory notes were published in March 2017 (Payment
Services Act) and July 2017 (Payment Institutions Act).
Both drafts are subject to consultation. Thereafter,
the Finnish legislator will present its final proposal for
the changes to the respective acts and the parliament of
Finland will decide on the proposal before the acts are
final. It is intended that the legislation will be in force by
the PSD 2 deadline of 13 January 2018.

Generally, the Finnish implementation does not go further
than the directive and the existing legislation is amended
only to the extent required by the implementation
of PSD 2.

Some of the optionality provided for in PSD 2 has been
used in the Finnish implementation, corresponding
with the member state options applied initially in the
implementation of the original Payment Services Directive
(PSD) in Finland. The optionality has thus been exercised
to the same extent as exercised in the implementation of
PSD and PSD 2.

Article 3 – exempting services based on specific
payment instruments valid only in Finland provided at
the request of an undertaking or a public sector entity
and regulated by a national or regional public authority
for specific social or tax purposes to acquire specific
goods or services from suppliers having a commercial
agreement with the issuer of such specific payment
instrument

Article 8 – disapplying own funds requirement in
relation to payment institutions which are included
in the consolidated supervision of the parent credit
institution

Article 29 – requiring payment institutions having
agents or branches in Finland to report to the Finnish
Financial Supervision Authority on the activities carried
out in Finland

Article 32 – exempting smaller payment service
providers from part of the procedure and
conditions

Options included in Articles 29(4), 32(1) (national
threshold) and 32(4) PSD 2 will not be exercised.

Norway

In Norway, PSD 2 will also be transposed in two parts.
Titles III and IV are implemented by changes to the
Norwegian Finance Contract Act and titles II, IV and V
by changes to the Norwegian Financial Undertakings Act
of 2015 and the Payment System Act of 1999. Norway
is still in the early stages of the legislative process of
implementing PSD 2. The draft implementation acts and
draft explanatory notes in respect of the institutional rules
in titles II, IV and VI were published in May 2017, subject
to consultation and with a deadline to comment by
mid-October 2017 and the other consultation paper in
respect of titles III and IV on 7 September 2017 and with a
deadline to comments by mid-December 2017.

The reason for this division is that the regulations come
under two different ministries. According to market
participants, it is difficult to respond properly to the
draft implementation acts in respect of the institutional
rules without seeing the other part of the draft proposal
however, which is now recently published. PSD 2 must
also be incorporated into the European Economic Area
(EEA)-agreement as Norway is an EEA country. It does
not seem likely that the deadline set by European Union
for implementation of PSD 2 legislation will be met by
Norway.

In short, the member state options dealt with in the draft
implementation acts in respect of the governing business
rules included:

Article 2 – entities exempted from the scope – as
the Capital Requirements Directive IV (CRD IV) is
currently not incorporated into the EEA-agreement, the
discretion to exempt certain entities from the scope in
accordance with the CRD IV is not a relevant option for
Norway

Article 8 – disapplying the own funds requirement
in relation to payment institutions which are included
in the consolidated supervision of the parent credit
institution (the Norwegian legislator has decided not to
take advantages of this option)

Article 32 – exempting smaller payment
service providers from part of the procedure and
conditions – the Norwegian legislator has proposed
to continue the current regime for a limited payment
service license and operating with the same threshold in
respect of transactional volume

Article 62 – the option to prohibit or limit surcharges
at a later date – Under Norwegian law an empowering
provision has been included which states that the
legislator may, at a later stage, adopt a regulation
to prohibit or limit surcharging. According to the
explanatory notes of the draft implementation acts
of Article 62, the legislator refers to the empowering
provision set out in the current legislation and states
that an introduction of a prohibition of surcharging
will require a more comprehensive review. The
draft implementation acts regarding the payment
services, which has not yet been seen, will address the
implementation of PSD 2, Article 62, paragraph 4

Sweden

The Swedish government has not yet published any draft
government bill. Until now, the government has only
published an official report (SOU 2016:53, published on
31 August 2016). Generally, the official report’s proposition
for new legislation does not go further than the directive
and the existing legislation is proposed to be amended only
to the extent required by the implementation of PSD 2.
The report, however, proposes an implementation of
the exclusion in Article 3(b) of PSD 2 that appears to be
contrary to the wording and intention of PSD 2.

The official report proposes that some of the optionality
provided for in PSD 2 should be used in the Swedish
implementation, corresponding almost to the member
state options exercised in the implementation of PSD in
Sweden. The optionality is thus proposed to be exercised
to a similar extent in the implementation of PSD and
PSD 2. A notable difference is that cash-in-transit companies’
‘counting services’ are proposed not to be exempted from
the scope of the Payment Services Act (which is currently
the case). Also, the report proposes that an exemption
should be made from the scope of the Payment Services
Act for payment transactions completed using mobile
telephones or other technological devices, for example
when purchasing an electronic ticket for a journey.
One condition for such transactions being exempted is
that the cost of the transaction is not to exceed an amount
corresponding to €50.

Additional optionality which Sweden proposed to exercise
includes:

Article 29 – the report proposes that foreign payment
institutions operating in Sweden through agents or
branches be required to submit information on their
activities in Sweden at the request of Finansinspektionen
or the Riksbank and that payment institutions
headquartered in another member state and operating
in Sweden through agents be required to appoint a
central contact point in Sweden if Finansinspektionen
deems this necessary

As mentioned, the proposed implementation of the
exclusion in Article 3(b) of PSD 2 appears to be contrary
to the wording and intention of PSD 2. According to
Article 3(b) of PSD 2, the directive does not apply to
payment transactions from the payer to the payee through
a commercial agent authorized via an agreement to
negotiate or conclude the sale or purchase of goods or
services on behalf of only the payer or only the payee,
whereas according to the Swedish Official report’s
proposal to Chapter 1, Section 7, the Payment Services Act
does not apply to payment transactions from the payer
to the payee through a ‘handelskommissionär’ ie a legal
figure that in Swedish law refers to a person who buys or
sells movable property in ie its own name, but on behalf of
someone else, in the course of a business.

Otherwise, there have not been any other noted
deviations in the official reports proposal for new
legislation.